SLO:DM will not be taking place in the open world that SLO:MMO will be in, imagine DM to be a bunch of small servers with each one having a capacity of min. 2 - max. 64 players. Each small server will also have a specific game mode turned on (many are planned) taking place on a specific map (many are planned, in terms of size think about the current map in the test).
In terms of customization, in the first iteration of SLO:DM we plan to have basic customization limited to choosing gender, clothing (+color), hair (+color), skin color and eye color. Customizing body proportions and custom skins will not be present in DM 1.0.
This would be great, nice suggestion Seyi. I don't really think this would be a problem as it is planned for the actual MMO anyway.
Maybe if Vreg finishes the Chunin exams before the MMO release, it might be implemented into deathmatch for more content. But who knows.
Who said SLO:DM will stay the way it is at release, SLO:DM will actually keep getting updated with new content, game modes and maps while we work on the MMO. We can certainly have events in DM, like weekly or monthly automatically organized tournaments with rewards, but I don't see this being associated with shinobi rank. In DM, your shinobi rank will be directly associated with your ELO rating, you won't have to undergo exams to get a certain shinobi rank. Exams don't really fit in the whole DM environment, it's really a feature that would only work well in the actual MMO.
TL;DR
Ranks may be part of an event in terms of your ELO rank for as long as the MMO version isn't out yet (Death Match mode).
Once MMO is out then yes, ranks are a thing.
For now, the Kages
could hold one, but it would hardly be official :\
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